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Admit it. As a pharmacy owner in today’s world, you’ve fantasized about what your life might be like if you just sold your store and got out. You’ve likely spent nights wondering how you were going to make it work when so many of your operations were beyond your control. I’ve been there and done that, and ultimately in 2020, made the decision to stop fighting the fight. In a letter I wrote to my patients, many of whom had been part of our pharmacy community for over 50 years, I told them how 80% of the prescriptions we dispensed were reimbursed BELOW our cost to dispense them. Let that sink in for a minute. Then consider what your number would be if you were to report out of your dispensing system the Rx’s dispensed at or below your cost to dispense. When I ran my numbers, I used $10.85, the nationwide number for 2019 available in the NCPA Digest. I knew things weren’t good, but I was shocked when I reported my 80%.
I try to balance being an optimist and a realist. I spent years working hard to change the model in my pharmacy. We provided excellent patient care, including nearly 75% of patients enrolled in medication synchronization, patient care programs, and immunization services, including a travel medicine clinic. We worked hard to improve our quality metrics and to offer niche services. After years of innovation, I realized that I was playing a game I couldn’t win because of the Pharmacy Benefit Managers. I applaud those owners who have found a way to adapt and make money in a soul-sucking anti-competitive environment. I was uncomfortable with the financial risk I was taking not matching the financial reward I was getting, and decided it was untenable for me.
Enough doom and gloom-remember-I’m naturally prone to choosing the bright side. I see so many paths forward for pharmacists today and still believe pharmacy is an exciting place to be, especially outside of the traditional model. I love the idea that a cost-plus pharmacy has so much more control over their operations. Eliminating PBMs changes the rules of pharmacy ownership and while it doesn’t take away all of the other competitive forces of the industry, it allows more control over it all. Being able to determine prices charged based on market forces rather than being given non-negotiable terms from PBMs and dispensing Rx’s below cost more times than not sounds like a good deal to me.
In addition to controlling your margin, consider today’s market — nearly 90% of prescriptions dispensed are generic. I’m hearing more and more about pharmacies who are minimizing or even eliminating brand dispensing. If brands represent less than 10% of Rxs dispensed but a huge portion of losses, is dispensing them still a solid business decision? While you’re reporting metrics, do yourself a favor and compare your generic vs. brand profits to backup your gut feelings about how things are playing out. Just because you’ve always done something the same way doesn’t mean you have to. Survival in today’s market rewards those ready to make a bold change. Eliminating brands and considering a cost-plus model for your generics could be a survival opportunity. Sometimes we become married to ideas that no longer serve us, and in today’s market, dispensing brand name pharmaceuticals from a traditional pharmacy may be an idea whose time has passed.
Have you checked your data recently to see what the average cost of your generic medications are? What you find may make you reconsider the idea that somehow, the PBM’s are helping you maintain patient access. We can’t consider the questions we don’t ask of ourselves, or the data we don’t have. If the average price of your generic medications are low, it may be time to think about how the role of the PBMs in your world are even helping you. I actually don’t think “help” and “PBM” even belong in the same article, let alone the same sentence. What does belong together are independent pharmacists and help-something you’ve been doing since you started this adventure.
Turn the hand-wringing moments of your worst days, (and don’t pretend you don’t have them — I’ve been around enough owners to know that grumbling is something most of you are really excellent at!) into analyzing your model with a different set of eyes. Ask the right questions, get the right data to answer them, then make informed decisions to change. We’re happy to help. Our commitment is to the success of independent pharmacies, and to spreading the cost-plus model around the country. Patients and pharmacists win when they decide together how care should happen.
